Reference no: EM13982109
Sunshine Software Ltd. ("SSL") is a proprietorship owned by Lisa Wharton. For the year ended December 31, 2015, Lisa calculated that her financial statement net income for SSL was $184,300.
Other information:
1. The following items were some of the items included in the accounting expenses:
Amortization expense$59,300
Product warrantee reserve 13,900
Cost of sponsoring community parade 7,200
Advertising on a foreign radio station 9,600
(directed at Canadian market)
Advertising circulars (only three-quarters distributed) 12,400
Business meals and entertainment 22,400
Charitable donations 31,900
Loss from theft 16,200
Interest paid on building mortgage 24,200
Appraisal costs on land to be sold 4,200
Damages resulting from breach of contract 3,800
2. SSL also spent $28,300 for landscaping the grounds around its office. For accounting purposes, the amount was expensed as a maintenance cost.
3. Included in office expenses were $5,000 paid to Lisa's son for providing janitorial services to the company. In pricing this work, Lisa found that it would cost at least $8,000 to obtain the equivalent services from an third party.
4. The office equipment had a UCC balance of$ 85,700 at the beginning of the year. Lisa would like to claim a capital cost allowance this year on these Class 8 assets only. She would like to take the maximum CCA deduction on this class.
Required:
Calculate the minimum net business income for SSL that will be included in Lisa's tax return for the year ending December 31, 2015. Also provide the relevant citation from the Income Tax Act to support each adjustment.
Your solution should be in the following format:
- Amount Citation
- Accounting Income Before Taxes:
- Additions:
- Deductions:
- Net Business Income
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